Who Said Commodity? How DoubleClick and Crew Remained Relevant

  |  April 4, 2007   |  Comments

Pundits once predicted online ad delivery would succumb to commodity status, but constant evolution has aided its survival and opportunities for emerging players and models.

For years pundits predicted online ad delivery would succumb to commodity status, and current rumors of Google supplying a free ad delivery service fuel that notion. However, even though ad management platforms are sometimes likened to municipal utilities, they have matured along with the interactive advertising industry. Today's technologies incorporate sophisticated targeting capabilities, campaign optimization, measurement analytics and inventory management, along with the ability to manage all types of campaigns, from rich media to search to in-game formats.

The space has gone through its share of consolidation, and lately has attracted a resurgence of interest as rumors of an imminent acquisition of ad management behemoth DoubleClick abound. Despite this, the prospect of a transformational shakeout or the emergence of a single ad management platform is not likely. To be sure, the multitude of emerging media channels, such as mobile, podcasting, gaming and iTV, indicates further consolidation and settlement on industry standards may be a ways off.

Ad management technologies are "the plumbing that's been a little bit behind the scenes for years," said Karl Siebrecht, president of Atlas, an aQuantive-owned ad management company popular with advertisers and agencies. "It's been there all along and I think the complexity in this space isn't going to subside anytime soon with the proliferation of new digital channels and new ways to target." Atlas last week unveiled the tenth version of its AdManager product, aimed at the publisher market, which is dominated by DoubleClick's DART for Publishers and 24/7 RealMedia.

As ad technologies and new media formats have emerged, the larger ad management firms have continuously updated product offerings, acting as filters for all the options available to advertisers and publishers. "We're almost Switzerland in this market; we're a technology solution and we apply services to that, but the unique factor about us is the critical mass of the buy side and the sell side," said Jason Bigler, VP product management for DoubleClick's advertiser solutions business.

What the full product suite ad management companies like DoubleClick and Atlas have tended to do in the past decade is pinpoint the digital media markets and ad technologies garnering enough interest -- and money -- from their clients, and developed or acquired relevant products and capabilities. As in most young industries, small vendors and service providers introduce new ideas, and when they reach critical mass, the big players start to show interest.

Then comes the scrambling to be first to market with a solution that fits seamlessly with the current platform, the bidding wars for vendors and providers that already have developed such a solution, or the investment windfall from banks and private partners hoping to build a fortune off that critical mass. In recent years, the larger ad management firms have developed or acquired capabilities for data analytics, ad optimization, e-mail, rich media, search, video and more.

The More Things Change...

The most recent move by DoubleClick actually harks back to its earliest days as an ad network, linking advertisers to publisher inventory. The firm is testing an ad exchange, essentially a hub for publishers and ad networks to connect with advertisers and agencies to sell or buy ads at optimum prices through an auction system. DoubleClick may even deploy the exchange to facilitate buying and selling on other digital media.

Eyeing less explored ad venues such as games, iTV and mobile, Eyeblaster last month scored a large round of funding from private equity investors. The veteran rich media firm has branched out from its previous station as a third party server of rich media ads, and ventured into the broader campaign management domain, seeking to grab clients away from the likes of DoubleClick and Atlas. Following a failed effort to get hitched to a larger suitor, Eyeblaster will use its recent $30 million cash infusion to move beyond its current display, rich media, video and search ad management offerings.

Eyeblaster investor Jonathan Kolber told ClickZ News the company aims "to have an early lead in forms of media that could be contiguous to what we're doing now." He mentioned mobile and iTV, and said new products could come about through in-house technology development or via acquisition. Eyeblaster in the past year has introduced a casual games ad platform in conjunction with RealNetworks and added a search marketing product suite.

The constant evolution of digital media has several players vying to be the one-stop comprehensive ad management "dashboard" or "operating system" for advertisers and publishers. But small outfits like Eyeblaster and large media firms like Microsoft and Google planting stakes in the ad management ground can cause headaches for the people actually running campaigns for sites, brands or advertiser clients.

Fragmentation Fears

"We actually get a lot of calls" from companies offering ad management technologies," said Grace Liau, media operations manager at Digitas. The interactive agency prefers to run campaigns through DoubleClick, but will use other platforms based on client requests. "People have a very simplistic view of the ad management world," Liau said, noting that sometimes advertisers can get swept up by the "dog and pony show" technology companies put on during presentations, leaving people like her to deal with systems that aren't appropriate for the task at hand.

The looming prospect of a Yahoo, AOL, Microsoft or Google offering a campaign management platform to rival the current third party systems available has Liau concerned. "My fear is that any of these publisher sites that don't understand the ad serving business will get into the game and make the market more fragmented than it needs to be," she said. One main worry she has is that the lack of standards when it comes to campaign tracking, measurement and reporting will only escalate as more companies unveil new platforms.

A desire for standards is "the largest problem or challenge that we're hearing from our customers on the marketer side," said Atlas's Siebrecht. His firm and its competitors often point to data analytics as the key to alleviating inconsistencies in campaign reporting, as well as understanding audience segments and how to target them.

For advertisers and agencies, reliable and clear reporting across campaign elements is crucial. Not only do ad platforms help keep track of media buys and determine budget allocation, the main reason many on the buy side are using an ad management system in the first place is to keep tabs on publishers.

"For our clients it's the number one priority," said Shawn Gurn, associate media director at full service ad agency Moroch Partners. "It allows us to bring to our clients accountability from a third party that we don't think we could deliver from individual publishers." Moroch Partners has used Eyeblaster's platform to manage its rich and non-rich media campaigns for clients for the past year.

An Exchange Edge for DoubleClick?

The ability to handle reams of data is also an imperative for publishers, yet their objectives are quite different. Publishers want to maximize ad revenue, so a top priority is to sell all ad space available for the highest amount possible. DoubleClick's new ad exchange and others like it have emerged with the promise to do just that.

Similar exchanges already exist, including AdECN and Right Media, of which Yahoo owns 20 percent. AdECN charges a flat fee to ad networks in the exchange while Right Media takes a cut of each transaction from ad networks and publishers. Right Media does not charge for ad serving, tracking and reporting, but considers the service a value-add, according to CEO Michael Walrath.

The fact that DoubleClick's new offering is integrated with its ad management platform sets the company apart from that competition, however, because publishers already using DoubleClick could get a more comprehensive view of their inventory, and both publishers and marketers could readily link other platform components to exchange buying and selling. Here, again, is an industry sector that's gained momentum through smaller operators to the point where it becomes worthy of integration into a pervasive platform.

Publishers want to maximize ad revenue, so organizing data to serve ads in the most efficient way possible -- target them to the most appropriate users, predict the amount of inventory that will be available, and manage that ad space -- is essential.

"Ad servers today are much more about inventory management than they are about the actual deployment of the ad," said Dave Morgan, chairman of behavioral targeting network Tacoda. Earlier this week, the company announced a relationship with ad inventory management and monetization firm Rapt. Rapt's technology will help Tacoda optimize ad yield, planning and pricing, and enable it to manage inventory across its network of publishers.

Some smaller publishers need the kind of hand-holding that comes from a small, niche provider. A&E recently switched from using Falk eSolutions to AdTech US, a German ad management firm that recently entered the U.S. market and has set its sights squarely on DoubleClick's publisher clients. DoubleClick squelched competition from European ad serving rival Falk by buying it about a year ago.

The larger the publisher, and the more entrenched its current ad system is, the more arduous and expensive the transition process to a new ad management platform can be. So it may be shortsighted to predict quick switches to whatever new platform pundits expect will kill off competitors.

Fox Guards Its Own In-House

Fox Interactive Media is in the thick of its own ad management integration process right now. The company recently bought ad tech firm Strategic Data Corporation to handle ad management for a portion of the display ads on its sites, including IGN Entertainment, Rotten Tomatoes, Fox.com and the data-laden MySpace.

"Given the mountain of data we had on our members, specifically at MySpace, we really needed a customized ad solution to bring this to market," FIM Chief Revenue Officer Michael Barrett told ClickZ News when the deal was announced. The company plans eventually to employ the SDC system to micro-target CPM-based ads to lifestyle audience segments using MySpace user profile and registration data, demographic data and information from user-created content. That could result in higher revenue from big brand advertisers than MySpace is currently taking in.

FIM currently uses DoubleClick for some of its ad management, including on MySpace. But according to DoubleClick's Bigler, the firm "has obviously steered clear of any kind of profile-based targeting for obvious reasons." He added, "It's a lot safer for a publisher to think about [targeting ads based on user profile data] as an isolated technology." DoubleClick was investigated by the Federal Trade Commission in 2000 after announcing plans to pair online profiles with personally identifiable information from the databases of its subsidiary offline marketing firm Abacus Direct. DoubleClick sold Abacus last December.

In addition to FIM's decision to bring some ad management in-house, the emergence of new players, media and business models indicate the needs of advertisers and publishers are becoming more complex than ever. Ad management platforms will surely step in to assist operational efficiencies -- if, that is, they can keep up.

"We haven't seen the tip of iceberg," said Bigler. Companies like his, he added, determine their next moves by "following the media dollar."

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ABOUT THE AUTHOR

Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

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